Cardiff testing optimistic

As the hunt for new reserves of natural gas intensifies, local oil and gas explorer Austral Pacific is reporting good gas flows coming from its Taranaki Cardiff well.

The onshore well, drilled in January, is being tested to see whether natural gas will flow up to the surface in commercial quantities.

High hopes are held for good quantities of natural gas to come from Cardiff, as gas reserves in the once huge Maui field are nearly depleted.

While there is plenty of gas for home and small business use, big industry and power generators are getting nervous about future large-scale supply.

This month, Austral began a process known as hydraulic fracturing at Cardiff - where fluid is pumped at high pressure down its well hole. This "fractures" the surrounding rock formation, which can boost the flow of oil and gas to the surface.

Despite some technical problems last week that caused delays, testing of gas zones was proceeding, Austral told the stock exchange yesterday.

"During the latter part of this operation, gas has come to surface in increasing amounts and a flare has been sustained," chief executive Dave Bennett said.

The second of three test zones is being prepared for flow testing now. It will be tested next week and Austral hopes both zones can be tested in combination the following week.

Much speculation and hype surrounds the Cardiff well, 30 per cent owned by Austral Pacific and 40 per cent by state-owned power company Genesis. Tests have already shown hydrocarbons are present, but Austral needs pressure and flow testing to confirm whether commercial quantities of gas can be obtained from the well.

The testing programme will cost about $3.5 million and is being funded by Genesis.

Concern over long-term gas supplies forced Genesis, a state-owned enterprise, to go to Government and ask for underwriting help for its new $500 million power station it is building at Huntly.

This provoked concern among others in the power industry, who felt Genesis, as a SOE, should have been competing as any other private business, not enjoying favours from Government.

Last month, Austral reported an after-tax loss for the year to the end of 2004 of $7.9 million, down from a $67,000 profit the year before. The loss was largely due to a $7.4 million write-off of its oil and gas properties, including the Kahili field, which turned out to be a dud with uncommercial rates of gas.